Thursday, December 31, 2015

New York Times explains Argentine President Macri's radical free-market policies

President Mauricio Macri won the Argentine Presidency earlier this month. He certainly cannot be accused of compromising his goals in an Obama-like desire for bipartisan harmony with the now-opposition Peronists. The party of the latter is the Partido Justicialista (PJ) and their Congressional bloc is called the Frente para la Victoria (FpV).

Macri is basically an Argentine version of Mitt Romney, born on third base and thinks he hit a triple. And he's fully committed to One Percenter economics, aka, predator state policies (Jamie Galbraith's phrase), Herbert Hoover economics, the Washington Consensus, neoliberalism, Merkelnomics.

A key part of the beginning was a drastic devaluation of the Argentine peso by letting it float freely against the dollar. At the same time, he dropped export controls that had been part of the previous government's strategy to promote domestic development. And as Gilbert reports, it was the traditional oligarchy based on agribusiness that got a windfall benefit from Macri's currency move:

The devaluation and a slashing of export taxes favored influential farmers on Argentina’s Pampas lowlands who had speculated about such moves by hoarding their grain harvests. They struck an agreement with Mr. Macri’s government to immediately sell billions of dollars of grain stocks, like soy, to ease the shortage of funds at the Central Bank.

But while these agricultural exports are now more profitable for the farmers, for people like Mr. Raspa, the devaluation is eroding their salaries and fueling price increases as imports become more expensive.

Gilbert's short piece relies heavily on the classic person-on-the-street interviews, many of which in the United States at least are actually practiced informal spokespeople referred to the reporter by interest groups to repeat their positions as though they were random citizens.

But Gilbert's description is generally pretty good. The immediate effect of the devaluation was a burst of inflation without corresponding adjustments to wages and salaries, immediately lowering the real incomes of millions of workers. In the neoliberal view, this is a good thing.

Gilbert also explains other drastic - and constitutionally questionable - actions of Macri:

Mr. Macri must also tread carefully, analysts said, because of his small margin of victory in the election. A decision to temporarily appoint Supreme Court judges by decree, bypassing Congress during its summer recess, was criticized as an overreach of executive power. This, together with moves viewed as steps toward the dismantling of a media law that is strongly endorsed by Mrs. Kirchner’s supporters, has left him less room for unpopular measures.

Mr. Macri has already moved to cool the simmering economic tensions, keeping Mrs. Kirchner’s [Cristina Fernández de Kircher, Macri's predecessor] price control programs in place for now and offering a small one-time payment to around eight million recipients of state pensions or child benefits.

Still, repercussions are already being felt. “It’s the workers who always pay for these crises,” said Raúl Lemos, 54, who manages a downtown paint store, as he clicked through an online price list showing that the price of some products had risen by 25 percent overnight. “Sales are going to drop.” Similarly, Sergio Camerucci, 52, who manufactures trophies and sells them to sports leagues, said the price of the plastic he needed to make the trophy bases rose by 20 percent after the devaluation. [my emphasis]

The comment that price controls were retained is very misleading. In fact, there was a massive increase in prices after Macri's election even before his inauguration and the devaluation in anticipation of Macri's action.

The "dismantling of a media law" to which Gilbert refers is the Ley de Servicios de Comunicación Audiovisual. Macri's intention to undermine it has both economic and political imperatives. The law basically inhibits further monopoly concentration of news media, which is dominated today by two major media groups, that of La Nación and that of Clarín, both known by the names of their flagship newspaper properties. The Nación group is the traditional media advocates for the oligarchy, agricultural and otherwise. Clarín is almost as bad. Clarín gave Néstor Kirchner favorable coverage during his Presidency (2003-2007), because he didn't try to interfere with their media acquisition activity. But one of the differences between Cristina and her husband was her hostility to Clarín because of their generally conservative tilt. So when she was elected President in 2007, she moved ahead with the media law limiting media monopoly and Clarín became her bitter opponent.

Since Gilbert's article, Macri has gone further and is attempting to reorganize the media regulatory agencies by executive decree and change the law itself by the same means. (Werner Pertot, La victoria de la terapia de shockPágina/12 31.12.2015) This seems especially high-handed since his supporters have a majority in Congress.

What makes this more than a crime story is that two of the prisoners played a role in the election campaign, in which Macri ally María Eugenia Vidal won the governorship of Buenos Aires Province, the country's most populous, in a contest against Cristina's candidate Aníbal Fernández:

The prison break by 40-year-old Martín Lanatta, his 41-year-old brother Cristian Lanatta and Víctor Schillaci, 33, shocked the nation in the midst of the Christmas holidays, as the brothers had made the headlines earlier this year by accusing ex-president Cristina Fernández de Kirchner’s cabinet chief Aníbal Fernández of being the alleged mastermind of the murders of Sebastián Forza, Damián Ferrón and Leopoldo Bina, three businessmen who were kidnapped and killed in a case linked to ephedrine and drug trafficking. [my emphasis]

Quite a coincidence, as various Peronistas were quick to point out. (Triple fuga de la cárcel con un arma de juguetePágina/12 28.12.2015) That fit with the law-and-order theme of Vidal's campaign and, despite the lack of any credible evidence at all to back up the unlikely charge, played a notable role in the campaign. One of the escaped murderers, Martín Lanatta, was interviewed on TV in August.

Aníbal Fernández isn't worrying too much about bipartisan harmony at the moment, either. He said, “Estos tipos ‘fugados’ son asesinos, que formaron parte de la campaña, junto con el actual gobierno” ["These "escaped" guys are murderers who took part in the {election} campaign together with the current government"]. (“Algo iban a cobrar”Página/12 28.12.2015)

The Governor's excuse is pretty inspired, in a bluff-your-way-through kind of way. She says they broke out because she's gotten a lot tougher on crime in the last month! Seriously: "What happened was the result of decisions we made, of clear messages, of our ‘no” to corruption, of the fight against drug trafficking. That message and the actions we have carried out since day one have had costs." You have to admire her chutzpah on this one! (BA governor reports “penitentiary service complicity’ in jail breakoutBuenos Aires Herald 12/28/2015)

Supposedly, the two used a plastic pistol to escape and steal a police car. As the article just linked notes, there are, uh, questions about the validity of the official story. The two brothers among the three had tried to escape in 2013, unsuccessfully. (El ensayo de 2013Página/12 28.12.2015)

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